Official blog of Gurcharan Das. He is the author of India Grows at Night: A Liberal Case for a Strong State (Penguin 2012);The Difficulty of Being Good: On the Subtle Art of Dharma (2009),India Unbound (2000),a novel,A Fine Family (1990),a book of essays The Elephant Paradigm (2002) & an anthology of plays,Three plays (2003). He writes a regular column for the Times of India and 5 Indian language papers and occasional pieces for the Wall Street Journal, Financial Times, and Time magazine.

Sunday, December 23, 2012

Ratan
Tata is a reticent man. He is 74 and retires this month as chairman after guiding
his group to be the country’s number one, $ 100 billion, in revenues. He commands
respect not only from his 450,000 employees but from the entire global business
community. He is courteous and complains rarely. But earlier this month he spoke
out in anguish. “Government inaction is driving investment away from the
country,” he said, and this was forcing groups like the Tatas to seek opportunities
abroad where you don’t have “a seven or eight year wait to get clearance for a
steel plant.” The finance minister, P. Chidambaram, echoed this
view, reminding us that over 100 mega projects had been stuck for years because
of a lack of approvals. Clearly, this failure of the government is greatly responsible
for bringing India’s economy to its knees.

Not only CEOs but ordinary Indians have been
voicing the same complaint for years. Why should it take 12 years to build a
road or 10 years to get justice in our country? Our public debate is filled
with talk of corruption, about the right to information, of democratic answerability
but almost no one speaks about the need for quick decision making or enhancing
the capacity of our weak, soft, and ‘flailing’ state. No amount of CAG’s
disclosures or ranting about the Lokpal will improve the state’s ability to act
or strengthen our crumbling institutions. Is our obsession with accountability
and transparency making us forget that the state was, in fact, created for
collective action?

Accountability is, of course, important. Over
the past decade, campaigns by activists supported by intellectuals have brought
significant gains, such as the Right to Information Act. The pressure exerted
by Anna Hazare’s movement backed by the media have raised awareness of
corruption in high places and even helped in the arrest of powerful people. We are
rightly proud of these achievements which have strengthened our democracy. But these
laudable steps have not significantly improved services of the state to the
citizen. Cases are still stuck in the courts; roads are built at a snail’s
pace; police will delay registering an FIR unless influence or money is exchanged;
it takes 117 approvals and 7-10 years to build a power plant. The list goes on.

Oddly enough, the push for democratic
accountability may have weakened our already feeble state. The average
official, always faint hearted and timid, is now even more afraid of putting
his pen to paper. This is the other side of our fight against corruption. The
modern democratic state has to balance the ability to deliver services on time with
accountability to the people. Other democracies have also faced this problem of
balance but they have found a way to cope by reforming their institutions. All
institutions, in fact, must aim for a balance between accountability and
action. A company could not survive if the CEO spent the whole day listening to
shareholders. A school would not be effective if its principal spent his time only
listening to parents. Already scorned as a “nation of talkers and not doers”,
India needs to shift its focus to action.

There is a great deal to be hopeful about India’s
future. It is stable, open, and amazingly tolerant. Its economic reforms have
put it on a promising path of rapid growth. It is breeding outstanding
companies which are more innovative than most in Asia. Its middle class is
growing rapidly and its poor will benefit from a more effective welfare system
based on cash transfers. But India’s soft underbelly is a soft, weak state,
whose institutions of governance—the bureaucracy, the judiciary and the
police--are in desperate need of reform. This is one of the reasons why its
economy has hit a wall as it approaches the $ 2 trillion GDP mark.

Ratan Tata and P. Chidambaram
have focused on one symptom of the disease—paralysis in decision making at the
centre. But even the solution--the recently formed cabinet committee on
investment—invites scepticism. The issue is not
ideological—a big versus a small state. India needs
to achieve an effective balance between our government’s ability to act and be accountable
to the people.

Thursday, December 06, 2012

On an evening in early
October , the announcer at one of our premier news channels screamed 'greed'
while describing the misdeeds of the latest victim of Arvind Kejriwal. Earlier
that day, Mr Kejriwal had accused Robert Vadra of receiving favours from the
real estate company DLF Ltd. In the next breath, the announcer explained that
crony capitalism was at the root of the problem.

Indeed, not a day
goes by when someone does not employ the word 'greed' to describe capitalism.
They say that if envy is the sin of socialism , greed is the sin of capitalism.
Capitalism is sometimes called a 'system of greed' and is this perhaps a reason
why capitalism is finding it difficult to find a comfortable home in India?
India is an open, tolerant, liberal democracy, but why is it unable to institutionalize
free markets? Why does India have to reform by stealth? Corruption, for example
, will not be beaten with a big, new authoritarian bureaucracy, as antigraft
protesters want. It will diminish only when discretionary powers are wrested
from dodgy bureaucrats and politicians and turned over to transparent,
competitive markets.

To equate
'capitalism' with 'greed' is a mistake. We tend to confuse self-interest in the
marketplace with selfishness or greed. At the heart of capitalism is the idea
of exchange between ordinary, self-interested human beings, who seek to advance
their interests peacefully in the marketplace . Adam Smith called this
'rational self-interest' . It is the same motive that gets one to jump out of
bed in the morning or makes one carry an umbrella if it rains—nothing selfish
about that. To be human is to be self-interested , and this is what exchange in
the market place entails.

Greed or
selfishness, on the other hand, is an excess of self interest and often
transgresses on the rights of others. It is present in all of us, but we find
it easier to see it in others and difficult to see it in ourselves. Greed can
motivate theft, entail himsa—hurting anotherwhose opposite, ahimsa, is a virtue
that Mahatma Gandhi extolled. But the other side of greed is ambition, a
positive thing, and when rightly directed, is life-affirming . Herein lies the
conundrum of human existence: that the same inner forces that result in a vice
can just as easily become virtues that can motivate the well-being of our
species.

Those who believe that
capitalism has been forced on us by the imperial West are also wrong. Friedrich
Hayek, the Noble laureate, called the market a spontaneous order—it is natural
for human beings to exchange goods and services, and this is how every society
evolved money, laws, conventions and morals to guide behaviour in the
marketplace. These are natural products of human endeavour. Competing and
cooperating in the marketplace existed in India before the West was imperial or
modern.

Whether we like it
or not, India is headed in the direction of some sort of democratic capitalism.
After two decades of reforms, hardly anyone in India wants state ownership of
production, where the absence of competition corrodes the character even more, as
we know too well from the dark days of the 'license raj' . Our animus against
capitalism has diminished after communism's fall as people increasingly believe
that markets do deliver greater prosperity, but most think that capitalism is
not a moral system. They continue to believe that morality must depend on
religion.

Although the market
is neither moral nor immoral, human self-interest usually brings about good
behaviour in the marketplace. A seller who does not treat his customers with
fairness and civility will lose market share. A company that markets defective
products will lose customers. A firm that does not promote the most deserving
employees will lose talent to its competitors. A buyer who does not respect the
market price will not survive. Lying and cheating will ruin a firm's image,
making it untouchable to creditors and suppliers. Hence, free markets offer
powerful incentives for ethical conduct, but they must be backed by state
institutions that enforce contracts and punish criminal behaviour . If the
market has an inbuilt morality, why are there so many crooks in the
marketplace? The answer is that there are crooked people in every society, and
this is why we need effective regulators, policemen and judges. We should
design our institutions to catch crooks and not harass innocent people as we do
so often.

The other cause of
our grief is to mistake being 'pro-market' with being 'probusiness' . To be
'pro-market' is to believe in competitive markets which help to keep prices low
and gradually raise the quality of products . Competition also means that some
businesses will die because they are poorly managed and cannot compete.
Kingfisher Airlines and Air India should be allowed to die and not be bailed
out by the government . Thus, being pro-market leads to 'rules-based
capitalism' ; 'pro-business' often leads to 'crony capitalism' . Not to have
explained this difference has been the great mistake of our reformers and this
has led to the false impression that the reforms only make the rich richer.
Crony capitalism exists in India today because of the lack of reforms in
sectors such as mining and real estate. To get rid of crony capitalism we need
more rather than less reform.

The doom-mongers ,
who claim that we are now resigned to live in an age of decaying moral
standards, are also wrong. Yes, the new Indian middle class is permissive and
indulges enthusiastically in har mless pleasures. Yes, it is materialistic ,
consumerist and capitalistic. But these impulses are not to be mistaken for greed.
Only when one's pleasure hurts another does it become a matter of the law and
then, of course, it must be punished. The shared imagination of the new India
with its harmless pleasure and victimless vice should not be condemned. Think
of ours as a society in transition . Mass wealth is profoundly disturbing but
once there is enough, India might again return to its old character of
renunciation.

Instead of
religious rules, young Indians are motivated by duties to fellow human beings
rather than to gods. Those who accuse them of shallow materialism ignore the
injustices that prevailed when religion held a monopoly on morality. They
overlook real ethical progress with regard to sexual and caste equality that
our secular society has begun to deliver. So, the next time Kejriwal makes an
expose and the TV screams 'greed' , do not fall into the trap of believing
capitalist culture is morally sick or that we should return to a moral order
rooted in socialism or religion.

About Me

Gurcharan Das has recently published a new book, India Grows at Night: A liberal case for a strong state (Penguin 2012). He is also general editor for a 15 volume series, The Story of Indian Business (Penguin) of which three volumes have already appeared.
He is the author of The Difficulty of Being Good: On the subtle art of dharma (Penguin 2009) which interrogates the epic, Mahabharata, in order to answer the question, ‘why be good?’ His international bestseller, India Unbound, is a narrative account of India from Independence to the global information age, and has been published in 17 languages and filmed by BBC. He writes regular column for several news papers and periodic guest columns for the Wall Street Journal, Financial Times, Foreign Affairs, and Newsweek. Gurcharan Das graduated with honors from Harvard University in Philosophy, Politics and Sanskrit. He later attended Harvard Business School. He was CEO of Procter & Gamble India and later Managing Director, Procter & Gamble Worldwide (Strategic Planning). In 1995, he took early retirement to become a full time writer.
Visit http://gurcharandas.org for his complete work and profile.